15, 07:55] Sekarreporter 1: https://twitter.com/sekarreporter1/status/1283044703760506882?s=08 [7/15, 07:55] Sekarreporter 1: NEWS STATES TAMIL NADU TAMIL NADU HC reserves orders on pleas challenging ordinance on cooperative banks Legal Correspondent CHENNAI 15 JULY 2020 00:50 IST UPDATED: 15 JULY 2020 00:51 IST The Madras High Court on Tuesday reserved its orders on writ petitions filed by two cooperative banks in Tamil Nadu to stay the operation of certain provisions of Banking Regulation (Amendment) Ordinance of 2020 which empowers Reserve Bank of India to deal with incorporation, regulation and winding up of cooperative banks too.
[7/15, 07:55] Sekarreporter 1: NEWS STATES TAMIL NADU
TAMIL NADU
HC reserves orders on pleas challenging ordinance on cooperative banks
Legal Correspondent
CHENNAI 15 JULY 2020 00:50 IST
UPDATED: 15 JULY 2020 00:51 IST
The Madras High Court on Tuesday reserved its orders on writ petitions filed by two cooperative banks in Tamil Nadu to stay the operation of certain provisions of Banking Regulation (Amendment) Ordinance of 2020 which empowers Reserve Bank of India to deal with incorporation, regulation and winding up of cooperative banks too.
Chief Justice Amreshwar Pratap Sahi and Justice Senthilkumar Ramamoorthy decided to deliver their verdict on July 20 after hearing Additional Advocate General P.H. Arvindh Pandian for the two banks, Additional Solicitor General R. Shankaranarayanan for the Centre and senior counsel A.L. Somayaji and Chevanan Mohan for the RBI.
The petitioner banks had urged the court to stay the operation of Sections 4(A), 4(F), 4(G), 4(J), 4(L), 4(M) and 4(Q) of the Ordinance promulgated last month on the ground that they deal with matters beyond the legislative competence of the Parliament and foray into the Constitutional powers conferred upon the State government.
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Mr. Pandian argued that the Banking Companies Act of 1949 was enacted to consolidate and amend laws relating to banking companies in the country. In March 1966, the name of the legislation was changed to Banking Regulation Act of 1949. A year before that, the Act was made applicable to cooperative banks too only with respect to certain aspects.
The applicability was restricted because State governments enjoyed the powers with respect to incorporation, regulation and winding up of cooperative banks as per Entry 32 of List II (State list) of the Constitution. The Supreme Court too had recognised such powers in a judgement delivered on May 5 this year. Hence, the provisions under challenge were unconstitutional, he contended.
However, the ASG rebutted the argument of the Parliament lacking the legislative competence to promulgate the Ordinance. He said, the Centre was empowered to regulate all kinds of banking operations. The object of the Ordinance was to protect the interests of depositors and strengthen the cooperative banks by improving their governance.
Appearing for the RBI, Mr. Somayaji said, there were 1,937 cooperative banks in the country doing business for thousands of crores of rupees. The Ordinance only provides more powers to the RBI to keep a tab on the operations of such banks and ensure that there were no irregularities.
